An empty data calendar is keeping the Euro on soft form today, allowing the US Dollar to eke out minor gains.
The EUR USD exchange rate has slipped to 1.1637.
Thin Data Climate Sees EUR USD Exchange Rate Weakening
There has been little Eurozone data released today, with hardly any left to follow, leaving the Euro rather directionless this morning.
EUR USD had gained ground yesterday after the European Central Bank’s (ECB) new Economic Bulletin was upbeat on the outlook for the currency bloc.
Repeating the tone set in the October monetary policy meeting, the Bank stated that;
‘Overall, the latest economic indicators are, on balance, consistent with a continued robust growth pattern in the second half of 2017.’
‘Private consumption is underpinned by rising employment, which is also benefiting from past labour market reforms, and by increasing household wealth. The upswing in business investment continues to benefit from very favourable financing conditions and improvements in corporate profitability.’
This was particularly cheering for markets as the ECB had indicated following the decision to taper quantitative easing that stimulus could be expanded again should the economy show signs of weakness.
That the central bank expects strength going forwards has therefore lessened the odds of a decision to reverse the reduction in the monthly asset purchase rate, which would have been a step backwards on the path towards higher interest rates.
This was followed by further positivity after the European Commission’s latest economic forecasts revealed that it expected to see the Eurozone expand at the fastest pace in a decade.
That has not been enough to provide continuing support to the Euro today, with only French industrial production and non-farm payrolls data released so far to influence traders.
Production grew 0.6% in September as expected, while August’s decline was revised lower from -0.3% to -0.2%.
Payrolls grew 0.2% quarter-on-quarter during the three months to September, slightly disappointing forecasts of a slow from 0.4% to 0.3%.
US Dollar (USD) Soft as Markets Await University of Michigan Confidence Data
The US Dollar remains on lacklustre form today ahead of the latest headline US data set for release this afternoon.
Even though markets are awaiting the release, the University of Michigan index is unlikely to do much to either help or hinder the US Dollar’s current position.
USD remains somewhat paralysed by the fact that markets are sfed hike otrongly expecting the Federal Reserve to hike interest rates during the monetary policy meeting next month.
Odds of a hike to 1.50% have remained above 90% for several weeks now, meaning the possibility is firmly priced into the US Dollar.
This is preventing the ‘Greenback’ from moving much higher on the back of positive news, while also limiting the impact of disappointing domestic data; it would take an extended run of disappointments from top-tier releases to suggest the Fed might think twice about hiking in December.
Therefore, while the Euro is on sluggish form this morning, the US Dollar has hardly been able to capitalise.
EUR USD Exchange Rate Forecast; Policy Insight from Mersch?
The only development on the Eurozone economic calendar today is a speech from European Central Bank official Yves Mersch, who is due to speak in Windsor today.
Should Mersch comment on asset purchases, interest rates, or the Eurozone economic outlook, markets may be given a reason to push the Euro higher or lower.
If Mersch avoids the topic, however, EUR USD exchange rates could remain flat until the release of the University of Michigan confidence index.
Considering the latest report is expected to show the sentiment index inched up from 100.7 to 100.9, the data is unlikely to drastically alter the trajectory of EUR USD.